Exactly two years after it last drilled production wells in Oil Mining Leases (OMLs) 4, 38 and 41, Seplat Petroleum Development Company Plc, which is listed in both Nigerian and London Stock Exchanges, will drill five new wells in the three acreages in 2018, as part of the companyâ€™s efforts to sustain optimal production.
Two oil production well recompletions in Ohaji South in OML 53 and one oil production well workover at Jisike and flow line installation, also in OML 53, are some of the wells to be drilled to enhance production growth in the plum assets. The companyâ€™s recently released interim management statement and interim financial results for the three months ended March 31, 2018, also showed that one gas production well and one gas well workover will also be drilled in the producing assets.
To achieve its 2018 targets, which also include installation of Non -Associated Gas (NAG) booster compression, second condensate train at Oben and upgrades to Sapele gas plant, the company has set its capital expenditure (Capex) at $100 million.
The company maintained its strong quarterly financial performance with first quarter 2018 revenue of $181 million and gross profit $93 million, 51 per cent gross profit margin.
Seplatsâ€™ Earnings Before Interests, Taxes, Depreciation and Amortisation (EBITDA) of $116 million was driven by higher total production and higher oil price realisation of $ 65.78 per barrel; average gas price $2.79/Mscf.
The company also recorded profit before tax of $59million, and net profit of $21million after a deferred tax charge of $24million.
The results also showed that cash generated from operations was $46 million versus capex incurred of $3million.
The Chief Executive Officer of Seplat Petroleum, Mr. Austin Avuru described the results as a good start to 2018.
â€œOur core production base remains strong and predictable, the gas business has once again set a new record for quarterly revenue contribution and the steps we took to refinance the balance sheet have significantly strengthened our liquidity position and will allow investments to be scaled up. Our debut bond issuance marks another key milestone for the company, widening our long term capital base in support of our growth strategy while also reducing overall borrrowing costs,â€ he said.
â€œLooking ahead we will return to drilling in the second half of the year as we re-focus our efforts on the numerous high margin and short cycle cash return opportunities we have in our portfolio.I am also pleased to report that our strong operational and financial performance has resulted in the Board taking the decision to reinstate the dividend for our shareholders. With our capital structure reset and robust free cash flow generation underpinning the business we also have the headroom to capitalise on inorganic growth opportunities as and when they may arise, in line with our price disciplined approach,â€ Avuru added.
Another major achievement of the company was that in the first quarter 2018, gas production was up 15 per cent and 66 per cent on a quarter-to-quarter basis and year-to-year basis, largely as a result of the companyâ€™s Azura gas contract to supply 52mmscf/d of gas.